Special Report: Beauty & Wellness Disruptors
The brands in BrandZ™ Top 100 Most Valuable US Brands ranking are well known and beloved in their home country, but they are not necessarily the ones most keeping investors, analysts, and CMOs up at night. Instead of the familiar old faces, they are interested in the dynamic disruptors, the small but exciting new brands that may soon take the world by storm. They want to know which ones are gaining momentum, what the real threats are, and how they can stay ahead of emerging trends.
This is a relatively new set of concerns. Even just a few years ago, launching a successful brand required significant investment in infrastructure, distribution, channel partners, and supply chains. Today all that has gone away. Thanks to the rise of e-commerce and social media, the barriers to market entry have fallen precipitously. Young, hip, nimble brands have appeared everywhere, launching new products and taking over categories. But with so many new brands cropping up, how can you consistently identify those with a real chance of disruption?
To answer that question, BrandZ™ has partnered with STAN, Kantar’s proprietary AI toolkit. STAN combines data, machine learning, artificial intelligence, and human insights to help identify opportunities for brand strategy, customer experience, and innovation. To do so, it leverages unstructured content (social, search, text, images, apps data, and so on) and combines it with other data sources to help understand specific topics in the marketplace.
To show how it can work, this year we elected to do a deep dive on the skincare industry, one of the most disruptive categories in the market today.
Background: skincare at a glance
Skincare today is a dynamic, changing, and growing sector, filled with both established players and a large number of upstarts. These brands are facing a public whose tastes are changing. Beauty used to be an outwardly facing category. Skincare products were things you put on your face in order to look your best. Today, we are seeing a new paradigm in which health, wellness, and beauty are converging. Consumers no longer see skincare products as a category unto themselves, but rather as a more holistic, inside-out phenomenon. They are increasingly concerned about what they put in and on their bodies. They want to know that products are safe, organically sourced, and designed to make them not merely look at but feel good.
What’s more, consumers are more concerned than ever about the social impact of everything they purchase. Beauty has become a “woke” category, in which people want to ensure that the products they buy are ethically sourced, environmentally responsible, and produced by companies that share their values. They are asking not merely whether products are effective, but how they reflect on them as people.
Finally, consumers today are seeing skincare as experiential. Instead of relying on the expertise of an individual or the endorsement of a celebrity, they are leaning on a wide variety of attributes to help them purchase products that are uniquely personalized to them.
US Context: a cluttered, dynamic market
The US skincare market offers us a nearly perfect test case for using STAN. The market is highly fragmented with no dominant players. It is also growing fast. It has seen a 20% increase in sales in the last five years and is projected to increase 20% in the next five years as well. Many of its established brands are not as differentiated as newer brands, which can be quite unique and focused on specific tastes, such as vegan or biocompatible. Some of them will likely always remain niche brands and pose little threat to their larger counterparts, except in aggregate. But others may prove highly disruptive, and the goal of this study is to uncover who they might be.
Above all, STAN-based methodology leverages social data to generate insights. Social media is excellent for this because it offers a direct connection between brands and consumers, and the degree of engagement around a brand shows how present it is in people’s minds. Analyzing these signals can help determine what people really think about brands and how it’s changing over time, which enables us to understand consumer preferences and uncover the key trends driving change in the marketplace. The enhanced data can help identify disruptive brands far earlier than traditional methodologies.
The STAN process consists of four steps:
- Create a universe. Gather relevant conversations from a variety of online sources, including Twitter, Facebook, Instagram, blogs, tumbler, comments, reviews, and forums.
- Structure the universe. Build a bespoke code framework using natural language processing to understand the structure of the conversation around these products and uncover topics and themes that may not have recognized in advance.
- Segment. Map the disruptors and take an analytical deep dive into each to identify wellness-related attributes.
- Analyze. Use analytics to identify hidden trends and likely opportunities for growth.
Unmasking the disruptors
Our analysis revealed some of the hottest brands in skincare for US consumers right now. Consumers are highly engaged with these brands and their buzz is growing fast, which signals a great potential to increase sales.
These hot brands include a combination of older and newer brands, but the unifying theme is that they all offer something distinctive to engage the customer. They also share a number of characteristics:
- Natural is the name of the game. Promoting a natural ingredient narrative is key to a brand’s ability to attract consumers today.
- Get personal and be authentic. Brands need to be authentic in their messaging. They can also cultivate loyalty using tactics like tutorials, before-and-after experiences, and consumer-driven conversation spaces.
- Rise up and take a stand. A good percentage of the hot brands take clear stands on social issues. Youth to the People announced its support for LGBTQ+ needs with customized product labelling; Bliss was accepted into PETA’s Beauty without Bunnies program; and Tatcha partnered with Room to Read. By identifying with and publicizing key social issues, these brands defy norms and increase conversational momentum.
- Lead with well differentiated offers. Hot brands offer something tangibly different. The market is heavily saturated with the establishment and daily newcomers, but those that break free gather attention and customers.
Skincare brands matrix powered by STAN
We can also the STAN methodology to map the current trajectory of a brand which enables us to see which brands are breaking through from disrupter status to mainstream success.
Select skincare brands to watch
A classic case of a product built before its time, Aztec Secret capitalizes on consumers’ recent trend toward natural, healthy face masks as part of their holistic wellness. Since its inception in 1986, Aztec Secret has made no substantive changes to its product line, nor has it made any attempt at marketing in the online world. Its outdated website even still offers a fax number for placing orders! Its role as a Disruptor is unique for its strict adherence to word-of-mouth and positive customer experiences with the product.
Notable differentiators: Indian heating clay, affordable, natural, wellness.
#1 bestseller in face masks on Amazon.com.
#2 bestseller in skincare products on Amazon.com
154% sales growth in the US from 2013 to 2018
55% sales growth expected in the next five years.
Glow Recipe is a key player in the trend towards Korean beauty (K-beauty) brands, with a focus on making skincare a fun lifestyle commitment by promoting “skin-tertainment to educate the customer.” It success is due in part to its excellent digital presence and its successful transition to a pure private-label company. It has seen a 102 percent increase in Instagram followers in the last 12 months and 17 percent increase in YouTube subscribers in the last six months. Look for this brand to remain solidly in the mainstream.
Notable differentiators: watermelon, Korean skincare, natural, wellness.
- $30 million in 2018 sales
- $100 million in expected sales by 2020, a 233% increase over 2018
- 766% growth in US K-beauty category from 2012 to 2019
- 154% increase in the sales of face masks in the US the last five years.
Youth to The People
Youth to the People positions itself as “superfood for the skin” with 100 percent vegan ingredients. Since its inception, the brand has rapidly expanded from a solely online to a significant brick-and-mortar presence in 800 North American Sephora locations and 1,500 stores globally. Its authentic messaging and minimalist packaging support its customer-centric voice. Look for this brand to shed its Disruptor status and push into the Mainstream soon.
Notable differentiators: vegan, natural, nutrient-rich, minimalist.
- 3x. The brand is expected to triple sales to $20 million in 2018.
- 2x. The brand doubled its sales every year for the last few years.
- 83% growth in searches for vegan skincare in the past year in the US.
- 2x. Consumer discussion around vegan beauty products has doubled in the past two years.
Self-defined as “clean compatible,” Drunk Elephant uses only biocompatible ingredients in its skincare products. A boots-on-the-ground marketing strategy and a trending online campaign pushed Drunk Elephant to become a household name in skincare circle, leading to its recent acquisition by Shiseido. Its “House of Drunk” pop-ups are synonymous with the brand’s new launches, and the #barewithus hashtag has opened the door to authentic consumer conversations about clean skin. Look for Drunk Elephant to remain a Mainstream name as it builds on its success.
Notable differentiators: vegan, natural, nutrient-rich coal, minimalist.
- #1 growing skincare product at Sephora in 2016.
- #1 selling skincare products at Sephora in 2016.
- 41% increase in sales of facial cleansers in the US in the past five years.
- 29% increase in sales of facial cleansers expected in the next five years.
When Bliss launched in 1996, the spa brand was at the forefront of the self-care movement. With the brand’s recent relaunch in 2018, Bliss pivoted to affordable skincare for millennials, featuring low-priced, aesthetically packaged, and trend-driven products. Bliss is also publicizing a key stand on an industry issue: its investment in cruelty-free formulas paid off with acceptance into PETA’s Beauty Without Bunnies program. Look for Bliss to continue these investments in the effort to become a Mainstream brand.
Notable differentiators: spa, affordable, cruelty free, wellness.
- 100% cruelty-free, paraben-free formulas
- 60% new product assortment from legacy brand. 50% price cut across the board.
- 25% growth in sales of moisturizers in the US in the past five years
- 17% increase in sales of moisturizers expected in the next five years.
With a focus on promoting a skincare regime as part of a lifestyle, Tatcha defines its product lines as rooted in Japanese and specifically geisha beauty rituals. An online Ritual Finder tool supplements its customer-centric narrative in identifying optimal skincare regime products. Its messaging has resonated among makeup artists, Hollywood stars, and social media influencers, paving the way for a Mainstream presence. The brand also donates proceeds from every customer purchase to Room to Read (a girls’ education program), which doesn’t hurt its standing in the least.
Notable differentiators: Japanese, clean, gentle, water cream.
- $500 million acquisition from Unilever in 2019.
- 80% increase in sales in 2018 to reach $125 million.
- #2 ranked Japanese beauty brand in the US market.
- More than $100 million in annual sales expected in 2019.